Nicolas Sarkozy brands cash donations allegations a 'disgrace'

French President Nicolas Sarkozy came out fighting last night claiming
allegations he had received illegal cash donations from the country’s
richest woman were a “disgrace”.

French president Nicolas SarkozyPhoto: AP

By Henry Samuel in Paris

8:12PM BST 12 Jul 2010

Mr Sarkozy insisted France was not a corrupt country but had got into “bad habits” as he made a live prime time television appearance to wrest national attention away from the most damaging scandal of his presidency.

The president stood by his labour minister, Eric Woerth, who is accused of taking 150,000 euros (£125,000) of cash from Liliane Bettencourt, the 87-year-old heiress to the L’Oréal cosmetics empire to fund the President’s UMP party during his 2007 electoral campaign.

But he said that he would set up a cross-party commission of inquiry to see whether there had been any conflict of interest in Mr Woerth’s ministerial duties and his post as UMP party treasurer and fund-raiser.

He also said he had “advised” Mr Woerth, whom he described as an “honest man”, to give up his party treasurer position.

The interview came hours after French police had searched seven homes and offices including that of a friend to Mrs Bettencourt.

Prosecutors said that Mrs Bettencourt had received a “police visit” at her home in the chic Paris suburb of Neuilly-sur-seine to pick up “certain documents”.

Officially, the hour-long TV interview on state channel France 2 was timed to allow Mr Sarkozy to explain a controversial pension reform to raise the retirement age from 60 to 62, a day before it was presented to the cabinet.

But the French president above all used the prime time slot to try and kill off a ballooning scandal over donations from Mrs Bettencourt.

The money, according to Mrs Bettencourt’s former accountant, was destined for the war chest of Mr Sarkozy’s centre-Right UMP party, to be used to help fund his successful campaign to win the 2007 presidential elections. The accountant also told police that Mr Sarkozy was a regular guest at Mrs Bettencourt’s mansion in Neuilly-sur-Seine, the wealthy town west of Paris where he was mayor for 18 years. She had meticulously noted down cash withdrawals in an accounts book and said Mr Sarkozy “might have” been among the recipients.

A finance ministry report released on Sunday cleared Mr Woerth of having intervened to protect Mrs Bettencourt from tax scrutiny while he was budget minister and tasked with fighting tax evasion.

Conversations between the billionaire and her wealth manager secretly recorded by her butler suggest she had hidden the existence of 78 million euros in Swiss bank accounts and an island she bought in the Seychelles from tax authorities.

At the same time, Mrs Bettencourt was one of the biggest beneficiaries of a 50 per cent “tax shield” for the wealthy passed by Mr Sarkozy after his election, receiving a 30-million-euro rebate.

Mr Woerth’s wife until recently helped manage Mrs Bettencourt’s estimated 17-billion euro fortune and according to the heiress’ top financial adviser was given the job “to please” Mr Woerth. She and her husband have denied this but she resigned after the scandal erupted.

Mr Woerth yesterday said that he was “hugely relieved” by the finance ministry report clearing his name, but the Socialist opposition said it proved nothing as it was conducted by the government department he used to run.

Although he shrugged off calls to resign, Mr Woerth did say he was considering stepping down from his position as UMP treasurer over claims of a conflict of interest.

The so-called Affaire Bettencourt started out as a legal feud between Mrs Bettencourt’s daughter and a society photographer whom she accused of abusing her mother’s ailing mental faculties to gain almost a billion euros in artworks, life insurance and cash.

It mushroomed into an affair of state after Mrs Bettencourt’s butler handed police and the media 21 hours of conversations he secretly taped, and following the revelations of her former accountant.

The affair has helped drive down Mr Sarkozy’s approval ratings to record lows.

Several separate investigations are under way into Mrs Bettencourt’s affairs. However, the Socialists have dismissed most of these as a smokescreen, as they are led by a prosecutor known to be close to Mr Sarkozy.

Philippe Courroye, whose name crops up in the butler’s tapes and has previously tried and failed to close the Bettencourt case, yesterday said he was not seeking to protect anyone and would pursue investigations into tax fraud and illegal party funding until “the truth emerges”.